Monday, August 8, 2016

How Pokemon Nudges Users to Spend

This Wall Street Journal article explores how PokémonGo and other mobile gaming apps "have mastered techniques for coaxing mobile-game players to make in-app purchases." This provides some crucial lessons about the future of marketing in general -- and the case for the new FairPay strategy in particular.

Here are some very interesting points about ways to get consumers to happily spend money -- points that can be generalized in computer mediated marketing of all kinds:

  • Once considered an unrefined nag, the in-app pitch has been honed so well it coaxes tens of billions of dollars a year from people who have gravitated to free mobile games.
  • They “engage people in a longer financial discourse than you would have in an upfront sale.”
  • Algorithms are playing an increasing part in nudging players to spend. Based on dozens of data points—how often gamers play, what model mobile device they use, location and gender—developers might raise a game’s difficulty level, making no two players’ experiences exactly alike.
  • Data on players’ behavior also are used to strategically tweak prices for virtual goods in real time. “You get people to spend more money if you understand their behavior,” said Niklas Herriger, founder and chief executive of Gondola, a New York analytics firm that develops algorithms for game developers. “You can trace their finger every step of the way.” 

In talking to companies about the potential of the new FairPay pricing strategy described in this blog, the two concerns that are most often raised relate to consumer behavior. Will customers be willing to become engaged in the game of spending money? And can I design the game to nudge users to be fair enough to provide a fair profit? 

The article suggests that both can now be done successfully. With the right choice architecture, a form of game design, customers can be nudged efficiently and effectively. If it can be done in marketing for a game, why not in other forms of marketing as well? 

That suggests the same is true for FairPay. It is a new logic, but a natural one -- the kind of economic cooperation that people have excelled at for millennia.  It is only in the past century that we have been conditioned to think differently. This anomaly has held force for all of our lives and is therefore all we know, but now it is time to jump into to the future. We have the technology -- and both businesses and consumers will love it.

For a full introduction to FairPay see the Overview and the sidebar on How FairPay Works (just to the right, if reading this at There is also a guide to More Details (including links to a video).